The effect of Eskom's supply chain strategy on its organization performance

Abstract

This research paper is a case study that analyses the effect of supply chain strategy on overall business performance. The study focuses specifically on Eskom which is a state owned Power utility in South Africa. The power utility generates 95% of the electricity demand in the country and approximately 45% of the electricity used in Africa. In 2010, Eskom embarked on a Corporate Strategic Review process whose purpose was to define Eskom’s strategic direction for the period 2010/11 up to financial year 2016/17. The strategy document that was then developed outlines the strategic imperatives, strategic initiatives and strategic risks as well as the key performance indicators to which Eskom should align. The 2010 Strategic Review identified the need for the company to work differently to ensure greater efficiencies, avoid duplication and encourage collaboration across divisions. All business units, divisions and subsidiaries within Eskom were thus required to develop their business plans and operational strategies in a manner that ensures support and alignment to the outlined corporate strategy. It is therefore against the 2010 strategic review which highlighted the need to improve efficiencies and for collaboration across all the business units, divisions and subsidiaries that this study is conducted on Eskom’s supply chain strategy and its effect on overall Eskom performance. iii An extensive literature review was carried out on the subjects of (1) supply chain management, (2) Supply Chain Strategy and (3) the development and implementation of supply chain strategy and organizational strategy in order to get an understanding of how supply chain strategy affect an organization’s overall performance. The results of the literature review were compared with the data gathered through semi structured interviews which were conducted with Senior and Middle Managers within Eskom’s Supply Chain as well as a representative from the department of Public Enterprises.